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Electric bill passing a step in the right direction

A bill banning variable-rate electric contracts in Connecticut passed the General Assembly on May 27.

In a bipartisan effort, legislators agreed the variable-rate contracts used by some electric companies take advantage of consumers, especially senior citizens. These companies use variable-rate contracts to attract customers with low introductory rates then quickly inflate rates above the standard offered by Eversource, formerly Connecticut Light and Power.

Gov. Dannel P. Malloy plans to sign the bill, which will make Connecticut the first state to ban the predatory contracts in an effort to protect consumers.

Electric companies opposed this bill, as well as legislation from last year that requires companies to report its future rates to customers.

Electric companies say the variable rates are tied to market conditions. The idea behind variable rates is that the consumer can potentially pay less than the standard rate when market prices are low. But according to the Connecticut Office of Consumer Counsel, the variable rates of fifteen companies rose 30 percent above the standard offer in the last quarter of 2014, when market rates should have been lowest. This cost consumers $10 million more than if they had paid the standard rate. Legislators agree that many electric companies offering variable rate contracts have taken advantage of consumers’ inability to monitor the market.

Pending the Governor’s signature, the new bill will go into effect Oct. 1, banning new variable contracts for residential customers. It will not affect current contracts and does not apply to businesses.

The bill does not completely do away with variable rates. Consumers can still be assigned to a variable rate if they do not sign a new contract or switch to the standard offer after their fixed-rate plans expire.

So what does this mean for your monthly bill? Starting in July, your electric bill will include the rate for the coming month. New variable-rate contracts will be prohibited after Oct. 1.

Some welcome news for consumers is that standard rates are set to drop in July for a period of six months, with Eversource prices decreasing by about a third. The last time rates were this low was July 2013.

This bill is a step in the right direction for consumer protection, but, as always, the consumer must remain vigilant. Check your electric bill, research your payment options, and make sure you never pay above the standard rate.


Selena West is an intern at the Office of the Community Lawyer. She is a sophomore at New York University

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